What would Elvis Costello Think?

Title

What would Elvis Costello Think?

I pondered that recently, when I spoke at a symposium titled, “(What’s so funny ‘bout) Debt, Budgets and Sequestration?” But my thoughts turned to weightier matters during the subsequent Q&A, when a student asked the presenters a simple question.

“If you were President for an hour, what would you do?”

Now, I’m not one of those who actually want to contract Potomac Fever. I am not running, nor will I ever run, for the Office of the President of the United States. Just to be clear. But what each of us would do in that position is an important question about priorities. Unfortunately, few take it seriously.

Pundits often pose straightforward solutions to assorted problems. Politicians often dismiss these proposals, saying, “It’s complicated”—until a former politician publishes a best-selling tome outlining his five-step solution to the country’s woes. Meanwhile a former pundit, now ensconced in a new administration, smiles pleasantly and responds, “It’s complicated,” when presented with that five-step solution. Really?

Politics may be “complicated” indeed, but principles of economic freedom are not. So, since I only had “an hour” as President, I simply responded:

“Impose a five year moratorium on all pending federal regulations.”

Here’s why.

There is much talk in D.C. about “the budget,” “deficits,” “debt ceilings,” and other fiscal monsters. But missing from the conversation is the exponential growth of the regulatory state over the last two decades and the negative impact of that growth on our economic health.

All regulations, even popular ones, are an unseen form of taxation, as compliance costs are borne by the private sector—that is, businesses and individuals. More importantly, the greatest costs of regulations are not direct costs, but opportunity costs—the foregone wealth creating activities lost because of regulatory burdens.

Both major parties pay lip service to the need to roll back unnecessary regulations. But how much overregulation is there, exactly? Politicians have no idea, and neither does the general public. We know the federal government will spend close to $4 trillion this year. But there is no comparable regulatory metric. This is a problem. Without understanding the scope of regulation’s cost, we cannot begin to address the burdens weighing down America’s economy.

My organization, the Competitive Enterprise Institute, releases an annual survey of the federal regulatory state, titled Ten Thousand Commandments. It attempts to assemble a wide array of disparate data on federal regulation in one easily accessible place. The numbers are astounding.

Last year federal agencies issued a total of 3,708 final regulations. That’s equivalent to a new regulation hitting the books every two and a half hours, 24 hours a day, seven days a week. What do all these rules cost? Around $1.8 trillion per year. That is slightly more than Canada’s entire 2011 GDP and more than U.S. government expenditures in 2001.

Let’s put in more human terms. Every year, an average American household “pays” more than $14,000 in hidden regulatory taxes, estimates CEI’s Wayne Crews. That’s more than every normal household budgetary item except housing. It’s also a start on a mortgage, a decent car, the beginning of a college fund. And regulatory costs are much higher for smaller businesses—nearly $3,000 more per employee—than for larger firms.

And that is why I answered the way I did.

It is the hidden, off-budget, opaque, and unaccountable nature of the federal regulatory state that places such a large dead weight on the nation’s future prosperity.

So, to jump-start the economy, to provide business with a measure of certainty about taking risks, let’s just stop all pending federal economic regulations for five years. Of course there will be tradeoffs and unintended consequences. Certain markets will remain overregulated and certain businesses will not face a level playing field. Certain bad actors may see this as a “get out of jail for five years” card. But things could get far, far worse were Washington’s regulatory behemoth to continue growing unchecked.

Quickly pulling off a Band-Aid hurts. But it has to be done if we want people to have economic opportunity, now and in the future. And think of how much could be accomplished. For five years, federal agencies could focus all their energies on examining all their existing and proposed regulations for efficacy, redundancy, inconsistency, and rent-seeking potential. Meanwhile, businesses and entrepreneurs could be freed up to become once again the nation’s driving force for sustainability and growth.

It’s not complicated.

And afterwards, we can sing “(What’s so Funny About) Peace, Love and Understanding”—and really mean it.